US fourth‑quarter GDP growth slows, Fed may cut rates later

The U.S. Bureau of Economic Analysis reported that fourth‑quarter 2025 GDP grew at an annualized 1.4%, well below the Atlanta Fed’s GDPNow estimate of 3%. The slowdown is attributed largely to reduced government spending following the prolonged shutdown, which cut growth by about 0.9%.

Consumer spending softened but is expected to rebound as tax refunds are issued and the labor market remains stable. Business investment stays strong, supported by capital spending from AI hyperscalers and other firms. Core personal consumption expenditures (PCE) inflation was recorded at 0.4%.

Analysts anticipate that the Federal Reserve may lower interest rates once, possibly twice, later in the year as the economy gains momentum in early 2026.